Maymont Development Sdn Bhd is confident of selling all 158 units of its Matahari luxury super condominiums within eight months.

The project, with a gross development value of RM700 million (S$291.16 million), is open to both local and international market and expected to be completed by the end of next year, said head of sales Prabu Ananthan.

‘So far, 43 per cent of the total units had been taken up in the past two months, with about 70 per cent being local buyers, for both investment and staying purposes,’ Mr Ananthan said.

‘With the Chinese New Year break and the market picking up, we are confident that all units will be sold within six to eight months,’ he said at a media briefing here yesterday.

The Matahari at Desa Sri Hartamas project in Kuala Lumpur offers 141 condominium units and 17 penthouses in nine blocks.

‘The ‘bungalow in the sky’ concept project is the ideal property for Malaysia’s expatriate rental market as it will secure the investor with impressive rental returns per annum,’ Mr Ananthan said.

‘We estimate about 6 per cent yield per annum with the superior units to be rented at between RM16,000 and RM18,000 per month, depending on the current rental market,’ he said.

Asked why the project was earlier stopped after construction had started in 2007, Mr Ananthan said this was part of a strategic effort to market the Matahari units not during the recession but ‘at the right time’.

Maymont’s head of marketing, Chelvi Ananthan, said the project had been 35 per cent completed so far, adding that the handover should be earlier than expected. She said that Maymont estimated the handover of phase one to take place in 2012 and phase two by end of 2012.

Located on a 5.2-acre freehold tract, the Matahari units are priced from RM3.1 million to RM10.7 million each.

The condominiums are partly furnished with three parking bays for each unit while the penthouses will have five parking bays each.

Source: Business Times, 12 Jan 2010

In the heart of the winter, many American homeowners may be romanticising about a vacation home in warmer climes.

Fewer people had the opportunity to buy one last year, what with the mortgage crisis. Lenders now appear more willing to finance second homes, but borrowers must be patient, eminently qualified and strategic about their housing choices.

‘People are beginning to see some opportunities, but they have to be strong borrowers,’ said John Walsh, the president of Total Mortgage Services in Milford, Connecticut.

The improving conditions for borrowers, Mr Walsh said, come mainly from the drop in vacation home prices, not any relaxation in lending standards. The lower prices, and lower loan amounts, make it easier for people to afford a second mortgage payment.

Fannie Mae and Freddie Mac, the US government-owned companies that essentially dictate the lending standards for mortgages, have actually tightened requirements on second homes.

Borrowers must now have credit scores of at least 660 and down payments of 20 per cent to qualify; a year ago, the industry standard was a 620 or better credit score and at least 10 per cent down.

While all borrowers have faced more scrutiny, lenders consider loans on second homes riskier than those on primary homes.

Because loan requirements were in such flux last year, many lenders opted not to take a chance on second-home mortgages, fearful of being forced by Fannie and Freddie to buy back the loans if the mortgages were not underwritten precisely according to specifications, said Ellen Bitton, the chief executive of Park Avenue Mortgage in Manhattan.

‘It is better today,’ Ms Bitton said, ‘because at least there’s movement on deals.’ Lenders have been more willing to process loans on vacation homes since October, she added.

But pitfalls remain. Mr Walsh says that borrowers seeking condominiums face longer odds of success. If the share of renters in a condominium complex is more than 30 per cent, for instance, lenders will not offer a mortgage.

‘Condos are a big red flag in general,’ he said. ‘And if it’s a second home, it’s even worse.’

Also, Mr Walsh said, while Fannie and Freddie may sometimes allow lenders to offer smaller mortgages on vacation homes to those with down payments under 20 per cent, those borrowers typically must have private mortgage insurance.

He said he knew of only one company that would insure such loans, but declined to identify it for competitive reasons. In any case, he said, the company will not insure vacation homes in Arizona, California, Michigan or Nevada, because they all have high levels of home foreclosures.

Bigger loans, too, may be more difficult to secure. Take, for instance, Fannie Mae or Freddie Mac mortgages of US$417,000 to US$729,750. These loans are usually offered only in areas that have higher-than-average home prices, like New York City.

Borrowers who seek bigger loans for vacation homes must have down payments of at least 35 per cent, Ms Bitton said, contrasting that with 25 per cent a year ago.

Jumbo loans – or loans above US$729,750 in high-cost areas and above US$417,000 elsewhere – are already in short supply for primary residences. For vacation properties, such mortgages are even more difficult to secure, according to the National Association of Realtors in Washington.

Jumbo loans in resort areas have been a particular problem. In a news release last November, the realtor group said that sales on higher-priced vacation properties had been hurt by lenders seeking large down payments and ‘overdocumentation’ for even well-qualified borrowers.

The group does not release its annual report on home sales until March, but at the end of 2008, the vacation-home market was already down from its peak, in 2005. That year, 40 per cent of all sales were second homes. In 2008 the figure was 30 per cent.

Source: Business Times, 12 Jan 2010

CBRE says the worst is over but returns unlikely to start growing until 2011

US commercial real estate investors may have to wait until next year to see their returns start to grow, as returns will likely remain in negative territory this year, according to the research arm of real estate services company CB Richard Ellis Group Inc.

‘The worst is behind us because (values) won’t be dropping as fast,’ Serguei Chervachidze, CBRE Econometric Advisors (CBRE-EA) Capital Markets economist said. ‘That translates into total returns as well.’

The greatest declines probably occurred in the third-quarter 2009, although fourth-quarter returns are not yet available, he said.

CBRE-EA based its forecasts on the NCREIF Property Index, compiled by the National Council of Real Estate Investment Fiduciaries, an industry group representing pension fund investors and advisers.

The index calculates total rates of quarterly returns based on a very large pool of privately held commercial real estate properties.

So far, total returns – net operating income plus the change of the value of a portfolio of property over a year – have fallen by double digits since the peak levels seen near the end of 2007.

For US office properties, total returns since then have fallen 23 per cent, for warehouse and distribution centres returns have fallen 21 per cent. Retail property returns are down 15 per cent so far, and apartment building returns are down 23 per cent, according to the NCREIF index.

Using the index, CBRE-EA said that returns, under its most likely scenario, should remain negative throughout 2010 and turn 3 per cent to 11 per cent positive in 2011.

It sees values ultimately falling 30 per cent to 53 per cent from the peak in the last quarter of 2007. Factoring in the slide since then, values are about one-third to halfway there.

Stronger, positive income returns from rents generated by commercial property should mitigate somewhat property value declines this year, CBRE-EA said.

Capitalisation or ‘cap’ rates, which move inversely to prices, are expected to rise another 0.60 to one percentage point into mid 2011, CBRE-EA projects under its base-case forecast.

Currently cap rates for office properties are about 6.35 per cent, 6.96 per cent for warehouse and distribution centres, 6.54 per cent for retail properties and 5.39 per cent for apartment buildings.

It see cap rates slowly falling – or values slowing rising – to 2005 and 2006 levels by 2012.

Source: Business Times, 12 Jan 2010

Bulk of US$675m investment in New York complex has been written down

The Government of Singapore Investment Corp (GIC) has written down most of its US$675 million investment in a giant New York apartment complex that was bought at the height of the property boom in the United States but which has since suffered from the collapse of the housing market there.

The joint owners of Stuyvesant Town and Peter Cooper Village defaulted on their debts last Friday, following a US court ruling that dealt the project a death blow last October. It had been struggling for months as it failed to deliver the hoped-for returns amid the US economic recession.

GIC had invested US$575 million in a so-called mezzanine loan backed by the property – a subordinated loan that sits between ordinary debt and equity – and US$100 million in an equity stake.

BT understands that the entire US$575 million debt investment has been written down. It is unclear if GIC has also written down its equity investment in the property.

‘GIC recognised the losses following the ruling by the New York Court of Appeals in October 2009 which precipitated the default,’ a GIC spokesman said yesterday.

In 2006, US developer Tishman Speyer Properties and BlackRock Realty, a unit of fund manager BlackRock Inc, bought Stuyvesant Town and Peter Cooper Village – a sprawling, 11,200-apartment complex with 110 buildings along New York City’s East River – for US$5.4 billion, the biggest property transaction in US history.

While details of the deal were not made public, news reports citing people familiar with the deal say that it was funded by US$1 billion in equity from institutional investors including GIC, US$3 billion in debt that was pooled with other commercial mortgages and sold on as mortgage- backed securities or bonds, and US$1.4 billion of mezzanine debt that was also sold to institutional investors.

The other investors included pension funds such as the Florida State Board of Administration and the California Public Employees’ Retirement System or Calpers, as well as US mortgage finance companies Fannie Mae and Freddie Mac – which own the biggest portion of the debt, according to a Bloomberg report.

The Florida State Board of Administration and BlackRock have written off their entire investment in the property.

Completed in 1947, the apartment complex was built at the end of World War II to provide affordable housing for New York residents returning from the war. More than 70 per cent of its apartments remained under rent control that subsidised their tenants when the new owners took over in late 2006.

The owners planned to evict tenants who no longer qualified for the subsidised rents, and raise the rents for the apartments to at least the prevailing market rates. They also expected to further boost the rents the apartments could command by investing in new amenities for residents, to generate the returns needed to earn a profit on their investment.

But the project ran into difficulties when US housing prices collapsed and the economy slid into recession.

By last September, a fund set aside for renovation of the buildings and to pay interest on the debt used to fund the deal had been nearly depleted.

And on Oct 22, the New York Court of Appeals upheld an earlier court ruling last March that the owners had wrongly charged market rents on thousands of the apartments while receiving tax exemptions under the city’s rent-controlled housing programme.

Source: Business Times, 12 Jan 2010

16.5t won blueprint scraps 2005 plan to relocate parts of govt to Sejong

South Korea yesterday announced a 16.5 trillion won (S$20.4 billion) blueprint to develop a new city as a science and education hub, scrapping controversial plans to relocate much of the government there.

The country’s biggest business group Samsung has signed a deal to move some operations to Sejong City, along with the Hanwha, Woongjin and Lotte groups, said Prime Minister Chung Un-Chan.

Yesterday’s announcement officially axes a plan unveiled in 2005 by then-President Roh Moo-Hyun to relocate nine ministries and four subsidiary agencies to the proposed city 150 kilometres south of Seoul.

Mr Roh’s liberal government had said the aim was to promote balanced regional development in a country where almost half the population lives in Seoul or surrounding cities.

The plan was also attractive to the Chungcheong region, whose traditionally uncommitted voters have often swung elections.

But Mr Chung’s office said it ‘would have resulted in inefficiency and waste’ of national resources.

However, the current conservative government will face an uphill battle securing parliamentary approval to change the plan, against objections from the opposition and from a sizeable faction of the ruling Grand National Party.

‘The Sejong City plan . . . is a task of correcting past errors and paving the ground for a new future,’ the prime minister said. ‘If the promise of the past was politically driven it would be courageous for a leader to correct it, albeit belatedly.’

The government has decided to create an economic hub centred on education and science in Sejong with total investments of 16.5 trillion won (S$20.4 billion), including 4.5 trillion won from the private sector, Mr Chung said.

‘We expect Sejong will grow into a self-sufficient city with a population of 500,000 with 246,000 new jobs by 2020.’

The city is named after the revered 15th-century monarch who invented the country’s alphabet.

The government has since 2005 built roads and other basic infrastructure as a prelude to transforming the country town into a sprawling modern city.

The government will provide incentives such as cheaper land, tax cuts and subsidies to lure firms, college campuses, research institutes and hospitals there.

Some 1.9 million square metres of land will be open for foreign investors.

An international science and business belt will be centred on Sejong, the ministry of education, science and technology said, adding that this could create new growth opportunities and allow the new city to become self-sufficient.

‘We believe it will spur balanced development and enhance the competitiveness of our nation,’ the Korea Employers’ Federation said. Samsung promised to invest 2.05 trillion won in the city.

Source: Business Times, 12 Jan 2010

Dubai’s housing rout sent prices down 52 per cent in the past year, prompting some homeowners to abandon their cars and mortgage payments and flee the country. Not one received a foreclosure notice.

Until now.

Barclays plc has won the sheikdom’s first foreclosure cases in court, clearing the way for lenders holding about US$16 billion of Dubai home loans to take action when borrowers don’t pay.

Islamic lender Tamweel PJSC, the emirate’s biggest mortgage bank, has several of its own foreclosure claims pending and estimates about 3 per cent of its mortgages are in default.

‘Banks will be more aggressive in pursuing legal action if they see the process is efficient,’ said Antoine Yacoub, a banking analyst at Moody’s Investors Service Inc. ‘They were trying to avoid the courts and restructure most of their loans, but once they see a precedent has been set, they will be encouraged to push more cases through.’

The successful foreclosures by Barclays may open the floodgates in Dubai’s property market, which went from the world’s best in 2008 to the worst after credit dried up and speculators who had fuelled price increases left the market, according to Deutsche Bank AG. Moody’s estimated in September that 12 per cent of the 27,000 residential mortgages in the sheikdom would default within 12 to 18 months.

Banks and developers until now have avoided the process of reclaiming homes through the courts, barred by tradition and an arcane legal process that few understood. The Barclays and Tamweel cases may change that because they show that a 2008 mortgage law – setting out rules for default, foreclosure and repossession – is working.

The law requires lenders to give homeowners 30-day notice of their intent to pursue a foreclosure, said Jody Waugh, a partner at law firm Al Tamimi & Co in Dubai. Courts then review the case and can issue a debt judgment that turns the property over to Dubai’s Land Department for auction.

Mr Waugh estimates that the process may take two to four months.

Barclays, Britain’s second-largest bank, said in an e- mailed reply to questions that it won the foreclosure orders, without providing details of the cases. The ruling shows that Dubai’s market is ‘evolving and is poised to come at par with other mature markets of the world’, the bank said.

Both lenders and developers in the United Arab Emirates have tried to stem rising defaults through out-of-court settlements with distressed customers after falling prices left buyers with mortgages worth more than their properties. That has helped minimise the amount of bad debt on their balance sheets and kept repossessed houses off a market that’s already suffering from too much supply.

Provisions for bad loans in the UAE surged 68 per cent to 32 billion dirhams (S$12.1 billion) as of November, compared with a year earlier.

Before the mortgage law was passed, lenders and builders could resort to the courts to enforce contracts, though they didn’t have the right to foreclose.

Tamweel’s pending cases, filed almost two months ago, involve homes abandoned by owners who left Dubai at the onset of the global financial crisis, chief executive officer Wasim Saifi said.

Tamweel’s default rate has been ‘hovering between 2.5 per cent and 4 per cent for the past six months,’ he said.

As alternatives to foreclosures, lenders in Dubai have extended payment periods and developers allowed customers with several properties to return some of them.

The absence of mortgage securitisation here makes it easier for UAE lenders to restructure loans than their counterparts in the US, where mortgage debt was often sold on to investors.

UK-based Standard Chartered plc and HSBC Holdings plc top the list of foreign banks providing mortgages in the UAE, according to Deepak Tolani, senior research associate at Al Mal Capital PSC.

‘While it is not Standard Chartered’s preferred approach, foreclosure is a legitimate course of action should a borrower not meet their obligations,’ the bank said in a statement.

HSBC declined to comment on the issue when contacted by Bloomberg, while Islamic mortgage lender Amlak Finance PJSC didn’t respond to e-mailed questions.

Banks are unlikely to head to the courts to foreclose on properties en masse because of concerns that large numbers of repossessed properties on the market will drive prices lower, said Saud Masud, a Dubai-based real estate analyst at UBS.

While auctioning a few properties ‘will be easy’, hundreds or even thousands of foreclosure sales may draw buyers away from new and secondhand properties, Mr Masud said.

‘It’s a slippery slope,’ he said. ‘Mass auctions may re-price the property market in a meaningful way as investors prefer to pick real bargains in auctions.’

A cultural stigma attached to forcing people out of their homes has also deterred foreclosures. However, that may not protect speculative investors who helped drive prices up by buying several properties with the aim of selling at a profit soon after.

‘The mortgage law has given clarity and certainty to the exact process that must be followed by anyone wishing to enforce a mortgage,’ said Mr Waugh, whose firm is currently handling fewer than 10 repossession cases.

Dubai’s population, which is about 90 per cent expatriate, may drop by 8 per cent in 2009 and another 2 per cent in 2010, UBS AG estimated in March last year. Dubai’s immigration department doesn’t provide regular statistics on visas.

Citizens make up only about 20 per cent of the overall UAE population, which largely consists of workers from countries including Pakistan, the UK and Lebanon. Workers have one month to leave the country after their work visas are cancelled.

Dubai first allowed foreigners to own property in 2002. That led real estate prices to quadruple in the following six years, helped by a growing expatriate workforce and speculation fuelled by borrowing.

The UAE last year scrapped a rule that automatically qualified homeowners in Dubai for a permanent residency visa. Owners of properties valued at one million dirhams or more are now required to renew residency visas every six months.

About 65,000 residential units will be completed in Dubai by 2011 and the emirate needs to create a minimum of 100,000 white-collar jobs to satisfy oncoming supply, Nomura said on Oct 15.

Deutshe Bank estimates that 30,000 units may be delivered by the end of this year.

‘When people talk about litigation in the Middle East, they’re concerned over the possible time it would take to obtain a judgment,’ Mr Waugh said. ‘The speed at which it appears judgments may be obtained under the mortgage law is a real, positive sign for banks.’ The Barclays cases were filed in November, he said.

The UAE’s central bank in October proposed reducing the time it takes for a loan to be classified as non-performing by half to 90 days. Banks ‘most probably’ will be asked to comply during the first quarter of this year, said Sofia El Boury, a banking analyst at Shuaa Capital PSC.

So far, no properties have been auctioned, according to Mohammed Sultan Thani, assistant director general at the Dubai Land Department. Requests may start pouring in this year as banks give up on other alternatives, he said.

‘Amicable solutions are hard to reach when a buyer has lost his job’ or when a property is worth less than the amount owed on it, Mr Thani said.

Mortgage loans totalled 137.6 billion dirhams in July last year, central bank data shows. About 25,000 to 30,000 mortgages have been taken in the UAE with over 95 per cent of them in Dubai, analysts say.

The central bank estimates that real estate accounts for about 13 per cent of total loans in the UAE. Shuaa Capital’s Ms El Boury said the real figure is ‘much higher’ and official numbers aren’t realistic ‘given the financing contributions to real estate construction and development in the UAE.’

The new mortgage law applies to only some kinds of Islamic lending, Mr Waugh said.

Shuaa estimates about 25,000 mortgages were extended by Tamweel and its competitor Amlak alone. The two lenders, which control more than half of the UAE’s mortgage market, are set to merge this year. Shares of both companies have been suspended since November 2008.

The biggest risks to banks come from loans underwritten after 2007, which are ‘most probably in deep negative equity by now’, Moody’s Mr Yacoub said.

Also at risk are Islamic Istisna’ mortgages where a buyer doesn’t make any payments until the property is delivered, he said.

Barclays said the court’s decisions will renew lenders’ faith in Dubai’s legal system, ‘which could result in bigger lending mandates specifically for mortgage business’.

Judging by the first cases, the process seems to be working, Al Tamimi’s Mr Waugh said. ‘Like anything, there are a few teething problems that are being resolved, but the fact that we have obtained judgments so quickly is positive.’

Source: Business Times, 12 Jan 2010

THE Government of Singapore Investment Corporation (GIC) has suffered losses investing in a prime New York property project after the American owners defaulted on a debt payment last Friday.

The exact size of the hit has not been disclosed but GIC is said to have invested a total of US$675 million (S$925 million) in Manhattan’s Stuyvesant Town and Peter Cooper Village.

It confirmed to The Straits Times yesterday that it had ‘recognised the losses’ on its investment last year.

The combined enormous housing apartment complex was bought for US$5.4 billion by a venture led by Tishman Speyer Properties and a unit of BlackRock, a private equity powerhouse.

The owners missed a payment of about US$16 million to lenders last Friday, a step that triggered the process to default.

A GIC spokesman said yesterday that it ‘recognised the losses following the ruling by the New York Court of Appeals in October 2009 which precipitated the default’. There was no further comment.

GIC reportedly owns a US$575 million mezzanine loan backed by the property. Following the default, it is believed to have written down the value of the loan.

It was also reported to have an additional investment of US$100 million in equity.

The joint venture bought the 11,000-unit Stuyvesant Town-Peter Cooper Village complex in 2006 in a top-of-the-market deal, in the hope of replacing existing tenants with higher-paying ones. But the highly leveraged deal floundered amid a weakened real estate market.

Last October, New York’s Court of Appeals, the state’s highest court, also ruled that Tishman Speyer and BlackRock had raised rents too fast and ordered them to pay several hundred million dollars in back-rent to tenants, in a move which shook the state’s real estate market. The property’s value is estimated to have plunged by more than half, to less than US$2 billion.

In addition, a debt-service reserve fund of US$400 million and a general reserve of US$190 million are believed to have been essentially drained by the owners.

Owing hundreds of millions of dollars to tenants and unable to charge higher rents, the owners defaulted on their loan and may yet declare bankruptcy if efforts to restructure the loan fall through.

If it does default, the combined 80-acre complex, Manhattan’s largest residential space, will be the second-largest default in a commercial mortgage-backed security deal, after the US$4.1 billion default on loans backing Extended Stay America hotels last year, according to Fitch Ratings.

The two properties, on First Avenue between 14th Street and 23rd Street in Manhattan, were built in the 1940s.

Analysts estimate that GIC, which is one of the New York properties’ biggest investors, manages a portfolio of between US$200 billion and US$300 billion globally.

Real estate investments made up 12 per cent of its asset mix, according to its annual report for the year ended March 31, 2009.

GIC’s portfolio slumped more than 20 per cent in Singapore-dollar terms for that financial year but it said last September that it has since recovered more than half of those losses.

Source: Straits Times, 12 Jan 2010

HDB residents got some pointers yesterday on how they can help arrest the littering problem in their estate.

Dr Maliki Osman urged them not to be a litterbug and to spread the anti-litter message to their family members, as well as contact the authorities when they spot anyone littering in their neighbourhood.

The Parliamentary Secretary for National Development gave the suggestions as ‘it is simply not possible for agencies to have ‘eyes on the ground’ round the clock’.

He added: ‘To combat high-rise littering effectively, it is critical that residents play an active part in the battle against litterbugs.’

Dr Maliki was responding to Mr Liang Eng Hwa (Holland-Bukit Timah GRC) and Ms Denise Phua (Jalan Besar GRC), who had asked about the need for more effective measures to combat the problem.

Pointing to an incident last Dec 12 in Sengkang, Dr Maliki said it showed there are grave consequences from such irresponsible behaviour.

That day, a 48-year-old man suffered serious head injuries when he was hit by a flower pot thrown from a 16th-floor HDB flat. A 34-year-old woman has since been charged with committing a rash act that endangered the personal safety of others.

Any person convicted of throwing killer litter may be fined up to $2,500 or jailed for up to six months, or both. Also, the HDB can evict the culprit and take back the flat. If it is a rental unit, the HDB can terminate the tenancy.

Dr Maliki said the National Environment Agency (NEA) handled 14 cases of high-rise littering in the last three years and the residents were either fined or given corrective work orders.

The HDB has also sent warning letters to 12 residents for throwing litter from their homes.

He said the Ministry of National Development is working closely with the NEA and town councils to find more effective ways to deal with high-rise littering and falling objects. It will also step up education efforts, he added.

KOR KIAN BENG

Source: Straits Times, 12 Jan 2010

‘Ensure that Singaporeans can continue to buy resale flats at affordable prices.’

MR GLENN NG: ‘I agree with Ms Yvon Lim’s letter last Wednesday (‘How realistic is $8,000 income ceiling for flats?’). While the combined salary of my wife and me exceeds the ceiling, I wonder if the Government is aware of the heavy financial burden couples like us must bear. Our parents are not working, which means we must set aside monthly expenses to support both sets of parents. We do not live with our parents and must also pay for the homes they live in, including bills. With the present price of resale flats hitting new highs, how can we afford one? We have been married for almost two years and yearn to have a child, but it is financially not feasible. The Government encourages young couples like us to have children but, ironically, obstacles like the income ceiling work against its aim. The influx of foreign talent has directly caused the price of resale flats to spike. While I am all for it, I must also ask what the HDB is doing to ensure that Singaporeans can continue to buy resale flats at affordable prices.’

Source: Straits Times, 12 Jan 2010

Price for six-storey Jalan Besar building comes to $940psf of net lettable area

CITY Developments Ltd (CDL) is said to have sold another smallish office block, this time at the corner of Jalan Besar and Kitchener Road.

The Office Chamber is believed to have been sold for slightly over $13 million. This works out to around $940 per square foot of net lettable area on the six-storey freehold property’s estimated net lettable area (NLA).

However, the buyer, believed to be a local investment company, is expected to refurbish the property extensively and this could see the NLA increase.

The Office Chamber’s gross floor area is more than 22,000 sq ft.

In November last year, CDL sold nearly all of a 999-year leasehold office block at North Bridge Road for $46 million or about $1,194 psf of strata area.

Buyer ERC Holdings plans to spend $3.5 million to $5 million to renovate the six-storey block for use as a campus for private school ERC Institute.

DTZ, which brokered the sale of the North Bridge Road property, is understood to have handled the sale of The Office Chamber as well.

Hong Leong Finance used to be a tenant in The Office Chamber. The property is close to CDL’s eco-themed City Square Mall, which opened late last year.

Supermarket chain NTUC FairPrice operates Singapore’s first green supermarket at the mall.

Office rents on the island are expected to dip further this year, although at a much slower pace than over the past 15 months.

An unexpected flurry of leasing activity over the past few months has led some office industry watchers to predict a bottoming-out of office rents as early as the middle of this year.

Property consultants are predicting a return to positive office demand to the tune of more than one million sq ft this year on the back of economic growth.

But with over 2.7 million sq ft of new space slated for completion in 2010, vacancies will continue to rise and rents dip, albeit at a slower clip than last year.

Older buildings suffering a flight of tenants to new projects will still face a challenging time this year.

Source: Business Times, 12 Jan 2010